Commercial real estate can be a lucrative business, but it can also be quite complicated. Even for those with experience, it can be tricky to make deals that require participants to plan over the long term. There are always many variables to consider, and it’s important to look at your investments from every angle. If not, you may find many unintended consequences down the road. Here are some things you will want to keep in mind when considering investing in commercial real estate:

Know Your City’s Laws

Make sure you know your city’s laws before finalizing any investments. Have an attorney look into potential land use, permits or zoning issues, as well as any regulatory or environmental obstacles that might exist. These laws can come with substantial costs of noncompliance, and without due diligence, you could be prevented from doing what you intend.

Before buying a commercial property, consider setting up a meeting with the local authorities to determine what approvals your city requires. Building a relationship with your local authorities will also provide you with a great foundation for the future.

Get Your Financing Together Early

Even before any contracts are drafted, an attorney’s input can be invaluable. Financing a commercial real estate transaction, for example, is far more complicated than just getting a residential home loan. Depending on cost, you may need to find a number of sources of funding. Have an attorney review loan structure ideas and provide help with your financing contracts. Doing this before you start looking for the perfect property will help you to avoid making costly mistakes.

Know Your Tax Liability

Taxes are a major consideration in any commercial real estate transaction. In many cases, the tax laws can work in your favor. Know when to use depreciation to you benefit or take the deductions you are allowed. Whatever the case, make sure you review everything with a certified public accountant so you know the impact taxes will have on your purchase. Also consider discussing your accountant’s conclusions with a tax attorney who can help you think strategically about lowering your tax bill.

Check Your Title

Property law can be tricky, and the last thing you want is to not have secure title to your new investment. You’ll need title insurance, so be sure to check in with a commercial real estate attorney who can provide you with information on potential title insurance issues.

Every title insurance policy begins with a title search. The search reveals everything that has been recorded on the property, such as deeds mortgages, and easements as well as any potential problems with the title. Additionally, make sure to check the ownership on any easements, covenants or other restrictions. This is a simple but necessary step that will save you money in the long run.

Patience is a Virtue

Patience is a virtue when it comes to commercial real estate transactions. The sale cycle is longer, which means an investor must remain vigilant when it comes to market demand. You must understand the market you are investing in. Having a good handle on the fundamentals – such as the legal side of things, your competition, rent prices – will allow you to make better choices and yield higher returns.

After the initial deal is done, don’t expect things to speed up too quickly. Compared to residential investments, everything takes longer. However, while it may take you longer to find new tenants, make renovations, and secure financing, commercial leases are longer and can provide you with more long term return on investment.

Think of Your Future

Whether you’re looking for industrial property, a retail location, commercial office space, warehouse space, or anything other type of commercial property, you need to approach the deal with a clear mind. Keep an eye on your bottom line, as well as the expectations of your investors and the legal and financial implications of your decisions. But don’t lose sight of the future; planning ahead is a key ingredient to a successful commercial real estate business.

Consider your commercial real estate investment portfolio. Do you have a five-year plan? A ten-year plan? Where do you want your business to be when you’re ready to retire? Be optimistic, but set yourself up for success by counting on sound data and not your own wishful thinking. Following these simple guidelines will help ensure that you avoid dangerous financial risks, but working with an attorney is always your best option for ensuring long-term success in the commercial real estate world.